Common Mistakes to Avoid When Vetting a Franchise
Embarking on your franchising journey can be a very exciting time, but don’t lose track of what’s important – finding a franchise that aligns with your goals, passions, and finances. With approximately 780,188 franchises in the US, there’s no need to rush through the decision process.
As you take the first steps to becoming a potential franchise owner, there are some things to keep in mind as you select the ideal franchise. We have outlined some of the common mistakes and what you can do to avoid them when vetting potential franchises.
MISTAKE #1: NOT TALKING TO OTHER FRANCHISEES
You can miss out on a lot of valuable insight by not talking to franchisees who work within the industry you are interested in pursuing. Not only do they know the ins and outs of operating a franchise business, but they may also offer you a “behind the scenes” look at some of the aspects that you may not see at first when researching an industry.
Ask them questions, such as what their day-to-day looks like, how much they invested, why they chose the industry they are in, if they are enjoying the process, any advice they wish they knew before beginning this process, etc.
Of course, your decision to pursue franchising should not rely solely on another franchisee’s opinions, but adding their perspective into the mix can help you feel better prepared as you begin the process of becoming a franchise owner.
MISTAKE #2: CHOOSING A FRANCHISE THAT DOESN’T ALIGN WITH YOUR PASSIONS OR VALUES
The beauty of franchising is that you don’t have to have prior experience in your chosen industry to succeed, but you should have an interest. Is the sector you are thinking of entering a place where you can see yourself engaged and interested in long-term? Finding a franchise that aligns with your passions will help make every day feel fulfilling and will give you the motivation when you feel unsure or things might not go according to plan.
Authenticity is a major component of franchising, especially in a customer-facing business. If your heart is not in it, it can come across to your customers, your employees, and the franchisor who is entrusting you to represent their company. This is why aligning your passions with the industry you are entering into will help you proceed with authenticity in everything that you do.
Also important is to research the franchise’s company values. Is it something they list publicly? How do they align with your own values? Asking yourself these types of questions will help you not only get a feel of who the company is, but also if you could see yourself representing such a company. It is important to fully understand what is motivating them and how they view the work they are doing in their particular industry. If a franchise company does not list their values or does not have a suitable answer when you ask about them, you may want to consider a different company.
MISTAKE #3: MISCALCULATE THE INVESTMENT & ASSOCIATED COSTS
Having the appropriate amount of funding to meet the initial franchise fee is necessary. Otherwise, you won’t get past the franchise application process. However, the franchise fees that accrue once you open the doors to your location are something you also need to consider before you get to that point.
On the website of the franchise that you are interested in, you will usually find details regarding the minimum liquid capital you need, minimum net worth, and the royalty fees set by the company. Be sure to read through this carefully and reflect back on your personal finances to determine if this is something you will be able to meet.
The ongoing costs of operating a franchise business (i.e., equipment costs, royalty fees, marketing and advertising, etc.) are also important to consider, as these costs will be necessary to keep your business up and running. Therefore, budgeting for them now will help you feel better prepared later in the process.
Remember, the initial investment is exactly that – initial. There will be subsequent payments required of you, which means you need to have the funds available to successfully run and grow your business.
MISTAKE #4: EXPECTING AUTONOMY OVER BUSINESS PLANS & DECISIONS
While franchising can be a great opportunity for a career switch, it is important to keep in mind exactly what a franchise is. As a franchisee, you are entering into a company that has a pre-established business plan that is proven to be successful. Therefore, franchisors expect their franchisees to abide by this plan and all the systems within it. This includes the products and/or services created by the company, how you prepare the products or perform the services is pre-determined, the construction and design of your location is established already, and so on.
This can be very appealing to those who may not be familiar with running a business or who like the stability of having a successful game plan already in place. However, understand that this means you will not have the ability to control certain aspects of the company and that you will be putting your trust in the franchisor. For some entrepreneurs, not having total freedom is a dealbreaker, thus pursuing franchising may not be the best career option.
MISTAKE #5: NOT CONFIRMING THE AMOUNT OF FRANCHISOR SUPPORT OFFERED
Whether you are just starting out in the franchising industry or you are a pro, every time you enter into a franchise agreement, there will always be something new and different that you may not be familiar with. From initial support to finding a location to training, running a successful franchise is largely dependent on the training given to the franchisee.
You’ll want to confirm exactly what that support will be. You can have a pretty good understanding of this right from the jump – does the franchise you are interested in offer an opportunity to talk with them at the beginning of the process and answer any questions you may have? This is typically a good sign that they are open to assisting you and are transparent about what they offer their franchisees. If they do, that time would be a good chance for you to ask what ongoing support they offer and what you can expect long-term.
You will often find franchisor support details within the Franchise Disclosure Document, which will be given to you later in the process (usually after financing is approved). If you get to that point with a franchisor, be sure to thoroughly read through the support section, and all the other aspects, as not doing so is another common mistake made by some franchisors.
FRANCHISE WITH DOGTOPIA
Franchising is an exciting venture and equipping yourself with key pieces of information about the franchise you are interested in will prepare you for success. If you are interested in franchising with Dogtopia, you can check out our FAQ page with further details, and fill out our online form if you are ready to take the next step and join our franchising family.